OfficeMax 2010 Annual Report Download - page 83

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Cash Paid for Interest
Cash payments for interest, net of interest capitalized and including interest payments related to the timber
securitization notes, were $68.9 million in 2010, $71.8 million in 2009 and $90.0 million in 2008.
11. Financial Instruments, Derivatives and Hedging Activities
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, trade accounts receivable, other assets (non-
derivatives), short-term borrowings and trade accounts payable approximate fair value because of the short
maturity of these instruments. The following table presents the carrying amounts and estimated fair values of the
Company’s other financial instruments at December 25, 2010 and December 26, 2009. The fair value of a
financial instrument is the amount at which the instrument could be exchanged in a current transaction between
willing parties.
2010 2009
Carrying
amount
Fair
value
Carrying
amount
Fair
value
(millions)
Financial assets:
Timber notes receivable
Wachovia ........................................... $817.5 $888.3 $817.5 $823.6
Lehman ............................................. 81.8 81.8 81.8 81.8
Financial liabilities:
Recourse debt ............................................ $275.0 $255.5 $297.6 $207.2
Non-recourse debt
Wachovia ........................................... $735.0 $811.1 $735.0 $754.8
Lehman ............................................. 735.0 81.8 735.0 81.8
In establishing a fair value, there is a fair value hierarchy that prioritizes the inputs to valuation techniques
used to measure fair value. The basis of the fair value measurement is categorized in three levels, in order of
priority, described as follows:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for
identical, unrestricted assets or liabilities.
Level 2: Quoted prices in markets that are not active, or financial instruments for which all significant inputs
are observable; either directly or indirectly.
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value
measurement and unobservable; thus reflecting assumptions about the market participants.
The carrying amounts shown in the table are included in the Consolidated Balance Sheets under the
indicated captions. The following methods and assumptions were used to estimate the fair value of each class of
financial instruments:
•Timber notes receivable: The fair value of the Wachovia Guaranteed Installment Notes is determined
as the present value of expected future cash flows discounted at the current interest rate for loans of
similar terms with comparable credit risk (Level 2 inputs). The fair value of the Lehman Guaranteed
Installment Note reflects the estimated future cash flows of the note considering the estimated effects
of the Lehman bankruptcy (Level 3 inputs).
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